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#113 Planet Money: Paying Doctors

#113 Planet Money: Paying Doctors

Planet Money vor 16 Jahren

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When the government created the Medicare system in 1965, they were so desperate to get doctors into it that they allowed them set their own fees.

The fee for service system was good for doctors, who now got paid for giving health care to the poor and elderly, but bad for the government. The crushing weight of doctors fees soon sent government budgets out of control.

Ten years later, President Ford thought he had the solution, cap the fees paid to doctors. Unfortunately capping fees just caused another problem, overtreatment.

It wasn't until the late 1980's that an economist from Harvard, Professor William Hsiao, finally came up with method to determine competitive prices for doctor's care — the relative value scale. Though this scale is used today, the problem of over paying doctors still exists. Hsiao, says that's because special interests have gotten a hold of his scale distorted it.